Bitcoin survived yet another wound this week, as the SEC rejected several ProShares Bitcoin ETF applications on Wednesday evening. Yesterday, 24-hours after the rejection, Bitcoin actually went up in price – contrary to what typically happens after an ETF application gets the axe.
This left investors around the world wondering…
“What the heck?!”
And most importantly:
“What did the SEC find wrong with the application this time?”
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I’ll touch on that last question in a minute, but first I want to talk about why Bitcoin didn’t plummet when the latest batch of ETF rejections were handed down.
If you’ve been paying attention to emerging developments within the crypto markets, or you’ve been following along with my contributions to Unseen Opportunity, you’d know that there’s a highly anticipated upcoming Bitcoin ETF ruling.
This one, which I like to call THE Bitcoin ETF (because it has the best shot at getting approved) is structured far differently from the ProShares ETFs that were just shot down, as well as all of the other ETF applications that have been denied in the past.
The Bitcoin ETF everyone is excited about is from VanEck, a company with a long history of creating ETFs, and is based off a proprietary index as well as a physical supply of Bitcoin. Most importantly, it will be deliberated on by the SEC around the same time that the Intercontinental Exchange (or ICE, owners of the New York Stock Exchange) will be setting up their federally insured Bitcoin marketplace.
By having a major player in the ETF creation game, as well as the company that owns the NYSE stirring things up at roughly the same time, the VanEck Bitcoin ETF has a much higher chance of getting approved compared to all the others – and savvy investors know this.
That’s why prices didn’t plummet following the ProShares ETF rejections.
Even though it is disappointing that the SEC shut down 9 total Bitcoin ETF applications Wednesday (to nobody’s surprise), the market has not reacted as negatively as many Bitcoin bears would’ve hoped. In fact, it seems like investors could care less about another pretender ETF application getting declined. In some ways, it could be seen as trimming the market of unnecessary fat.
So, in short – cryptocurrency investors won’t react to any of the “other” Bitcoin ETFs (not offered by VanEck) getting shut down in the future. They’ve seen these shoddily thrown together funds get smacked down numerous times now, and any other ill-conceived attempts to push an ETF through the SEC will be met with the same response.
But what was it that the SEC didn’t like about the ProShares ETF applications?
What, specifically, was wrong with them?
Among other objections, the biggest problem they had was that “unidentifiable participants can influence the market.”
What they mean is that due to cryptocurrency’s anonymous nature, it could be hard to track down big-time manipulators – potentially opening a can of worms for ETF investors.
The truth is, that while all markets are manipulated, Bitcoin still faces the most exposure. That’s why with the creation of the federally insured Bitcoin marketplace by the ICE (and their child company, Bakkt), we could see a new era of accountability and safety for crypto investors.
Holders of Bitcoin would still remain anonymous, but it’s highly likely that institutional investors will rely on the newly created marketplace and ETFs to invest in crypto – all things that require identification for the actual transaction. Due to the way the new marketplace will operate, it will also make owning and using Bitcoin easier than ever before – something that investors have been waiting for to dramatically increase crypto adoption.
So, while “old-money” analysts and curmudgeons may want to identify this latest ETF rejection as a sign of things to come – I’d argue that we’re right on track for a major bull run event later this year, if not even more so than before, as investors have proven through yesterday’s trading that they understand what’s important for Bitcoin’s growth.
And that, to me, is good news.